A week ago, I had a post tying retirement and college planning/saving together.
Below are four more reasons why 529 plans can be the best vehicle to save for college
- Lower Impact on Financial Aid than Other Savings Options
- Many parents worry that a 529 savings account can adversely affect eligibility for financial aid. However, so long as the parent is the account owner, funds are typically treated as belonging to the parent, not the child, minimizing the impact on financial aid.
- Everyone Can Help
- You don’t have to do it all on your own! Grandparents and other family and friends can make gifts to your account for maximum growth potential.
- Unused Funds Can Be Used for Other Eligible Members of Your Family
- Suppose your child or grandchild doesn’t need all the money or their education goals change. In that case, you can designate a new beneficiary penalty-free so long as they’re an eligible family member.
- Estate Tax Planning Benefits
- When you or anyone else contributes, it may qualify for an annual gift tax exclusion of $16,000 per year for single filers and $32,000 a year for couples. In addition, many 529 Plans will allow you to give up to 5 years’ worth of gifts at one time — for a maximum of $80,000 for a single filer and $160,000 for couples.
Here you can find the first four reasons why contributing to a 529 plan can be a great way to plan for college